Who's getting a raise? People employers can't do without

(Wil Neumann | Special to The Gazette) Greg Botner, at Wilbert Plastics Belmont production facility.

By Adam Orr

Published: Friday, July 25, 2014 at 09:44 AM.

If you’re considering asking your boss for a raise, you may want to hold off for just awhile longer — unless you work in manufacturing. A recent poll of the National Association of Business Economists reported that 43 percent of their firms raised wages last quarter, the third straight quarterly rise and more than double the reported increase from the same quarter last year.

Just 35 percent of the same group, however, expected an increase in wages over the next quarter. “We do expect a slight pickup in income growth this year,” Mekael Teshome, an economist with the PNC Financial Services Group said. “But because the labor market is getting tighter, we don’t expect the wage increases to be that significant.”

Combined with a slight uptick in inflation over the past year, Teshome said wages are slightly lower than the same period last year. The good news? Teshome and Mark Vitner, a senior economist for Wells Fargo, each expect the labor market to improve over the remainder of 2014, including in the Charlotte metro area.

“The biggest mover this year will be in the number of jobs added,” Teshome said. “Our forecasts call for fairly healthy job growth which should continue to drive unemployment down.”

The closer the economy comes to 5.5 percent unemployment — what Teshome said many economists consider full employment — is when he said he expects more upward pressure on wages. Vitner said wage growth has been one of the key factors missing in the economic recovery.

“It’s gradually improving, one of the missing links in the recovery because the recession was so deep,” Vitner said. “So many of the jobs added in the recovery have been low paying, so there simply hasn’t been that much upward pressure on wages.”

The decline in the area’s unemployment rate has lagged behind the national average, according to Vitner, but he said certain industries have started to show upward wage pressure, including the construction and manufacturing sectors. “Manufacturers in particular have had to start to boost wages because they’ve had trouble finding workers,” Vitner said. “The transportation and trucking industries have also seen some pressure, but less so in the health-care industry, which has remained relatively stagnant.”

Greg Botner, president and CEO of Wilbert Plastic Services in Belmont, said wage increases in most of his company’s positions have slightly outpaced inflation. The pay for skilled manufacturing process engineers and manufacturing managers, however, has increased by 15-20 percent in some areas in recent years, he said.

“For people with skill sets relative to manufacturing, we’ve seen a significant increase in demand and with that has gone the wages,” Botner said.

Botner said the increased wages might normally lead to faster hiring for in-demand positions, but he said that has not been the case recently.

“We found that we were able to fill these positions at first, but over the past 12 months or so, more companies have been counter offering our offers,” Botner said. “In the past companies wouldn’t match an offer 20 percent above what they were paying someone. But they are now because you have to hold on to employees with the skills you need.”

Botner said the current climate means more candidates accept — and then rescind — employment offers than in the past. It’s a hiring situation Botner said he’s never encountered in his 38 years of experience.

“The phenomena is that our industry has shrunk, but the number of personnel has shrunk more,” Botner said. “Now that the industry is in growth mode this is where we’re at.”

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If you’re considering asking your boss for a raise, you may want to hold off for just awhile longer — unless you work in manufacturing. A recent poll of the National Association of Business Economists reported that 43 percent of their firms raised wages last quarter, the third straight quarterly rise and more than double the reported increase from the same quarter last year.

Just 35 percent of the same group, however, expected an increase in wages over the next quarter. “We do expect a slight pickup in income growth this year,” Mekael Teshome, an economist with the PNC Financial Services Group said. “But because the labor market is getting tighter, we don’t expect the wage increases to be that significant.”

Combined with a slight uptick in inflation over the past year, Teshome said wages are slightly lower than the same period last year. The good news? Teshome and Mark Vitner, a senior economist for Wells Fargo, each expect the labor market to improve over the remainder of 2014, including in the Charlotte metro area.

“The biggest mover this year will be in the number of jobs added,” Teshome said. “Our forecasts call for fairly healthy job growth which should continue to drive unemployment down.”

The closer the economy comes to 5.5 percent unemployment — what Teshome said many economists consider full employment — is when he said he expects more upward pressure on wages. Vitner said wage growth has been one of the key factors missing in the economic recovery.

“It’s gradually improving, one of the missing links in the recovery because the recession was so deep,” Vitner said. “So many of the jobs added in the recovery have been low paying, so there simply hasn’t been that much upward pressure on wages.”

The decline in the area’s unemployment rate has lagged behind the national average, according to Vitner, but he said certain industries have started to show upward wage pressure, including the construction and manufacturing sectors. “Manufacturers in particular have had to start to boost wages because they’ve had trouble finding workers,” Vitner said. “The transportation and trucking industries have also seen some pressure, but less so in the health-care industry, which has remained relatively stagnant.”

Greg Botner, president and CEO of Wilbert Plastic Services in Belmont, said wage increases in most of his company’s positions have slightly outpaced inflation. The pay for skilled manufacturing process engineers and manufacturing managers, however, has increased by 15-20 percent in some areas in recent years, he said.

“For people with skill sets relative to manufacturing, we’ve seen a significant increase in demand and with that has gone the wages,” Botner said.

Botner said the increased wages might normally lead to faster hiring for in-demand positions, but he said that has not been the case recently.

“We found that we were able to fill these positions at first, but over the past 12 months or so, more companies have been counter offering our offers,” Botner said. “In the past companies wouldn’t match an offer 20 percent above what they were paying someone. But they are now because you have to hold on to employees with the skills you need.”

Botner said the current climate means more candidates accept — and then rescind — employment offers than in the past. It’s a hiring situation Botner said he’s never encountered in his 38 years of experience.

“The phenomena is that our industry has shrunk, but the number of personnel has shrunk more,” Botner said. “Now that the industry is in growth mode this is where we’re at.”